JEDDAH, 1 February 2008 — China Petroleum and Chemical Corporation (Sinopec) and Saudi Basic Industries Corporation (SABIC) yesterday signed in Beijing a heads of agreement (HOA) to build a one million ton ethylene derivatives joint venture complex in China’s northern city of Tianjin, SABIC said in a statement.
The 50:50 equal share joint venture company will invest in a 1 million metric ton per year of ethylene derivatives complex (600,000 metric tons of polyethylene and 400,000 metric tons of ethylene glycol) to be set up in Tianjin that will receive all its ethylene feedstock from an ethylene cracker owned by Tianjin Petrochemical Company, a branch of Sinopec Corp. The total investment will be around $1.7 billion, with the complex scheduled to be completed by September 2009.
The HOA was signed at a ceremony in Beijing by SABIC Chairman Prince Saud bin Abdullah bin Thenayan Al-Saud, and Sinopec Corp. Chairman Su Shulin.
Prince Saud said: “The new joint venture with Sinopec Corp. will further strengthen the links between our two companies. This will be SABIC’s first joint venture in China and we hope this will lead to more joint ventures and a strong relationship with Sinopec in the important China market.”
SABIC already has a strong relationship with Sinopec Corp. and Chinese engineers from Sinopec Corp. are currently helping to construct a world-scale polyolefins complex for SABIC affiliate Yanbu National Petrochemicals Company in Yanbu, Saudi Arabia. “China is an important market for SABIC’s global strategy. This heads of agreement is a key milestone toward realizing SABIC’s goal of establishing a manufacturing center in Asia,” said Mohamed Al-Mady, SABIC vice chairman and chief executive officer.
This facility in Tianjin will serve customers in the world’s fastest growing market, and is an important component in SABIC’s corporate strategy of being among the world’s top petrochemical companies by 2020,” Al-Mady added.
Sinopec has started work on an 800,000 ton per year ethylene plant in the Yangtze river city of Wuhan, a company website said on Wednesday.
Beijing estimated earlier this year that the plant would cost 14.7 billion yuan ($1.99 billion).
but the report on Sinopec News did not say when it would be finished.
The cornerstone of plans to build up central China’s first large-scale petrochemical production base, it is just one of 7 projects under construction nationwide, with a total 6.2 million tons of capacity, the report added.
The country currently imports more than half the petrochemicals that its booming economy needs, and its refiners are rushing to try and make up the gap.
By 2010, national production capacity will be 18 million tons per year, Sinopec News said.
Ethylene is the basic building-block for petrochemical products ranging from plastics to paints and synthetic fabrics.
China’s top oil firm CNPC plans to add a 1 million tons per year (tpy) naphtha cracker at a reclaimed harbor site off the Bohai Bay east of Beijing.
If Beijing approves the project by the middle of next year, as expected, the plant should come on line around 2011.
